How Do Female Investors Overcome Financial Barriers When Preparing for Retirement?

Women professionals are a driving force in today's workforce, contributing significantly to various industries and sectors.

However, despite their comparable performance and contributions, they often face financial disadvantages, especially as they approach their later years.

This raises a pressing question: why do many women encounter financial barriers?

Despite contributing to Social Security, pensions, and savings, women typically find themselves with 70% less income during retirement compared to standard benchmarks.

What we commonly observe is that women are more inclined to work part-time or navigate in and out of the workforce due to caregiving responsibilities, resulting in limited opportunities to save for retirement and reduced access to employer-sponsored retirement plans.

Additionally, lower wages, combined with time away from work, lead to diminished Social Security benefits.

So, how do we tackle these challenges? Let's dive into three practical steps you can start with today to really make a difference.

Maximize Retirement Savings

Maximizing retirement savings is a critical step towards securing a financially stable future, and it begins with utilizing available savings options like employer-sponsored 401(k) plans or individual retirement accounts (IRAs).

If you’re contributing to a 401(k), it helps to know how to make the most of it.

Your 401(k) is a big part of your retirement savings but can you remember the last time you logged in?

Asking yourself when you last logged into your 401(k) account not only prompts a review of your current strategy but also highlights the importance of active management.

Staying engaged with your 401(k) is essential for adapting to changes in financial goals and risk tolerance over time.

This proactive approach includes regular rebalancing of accounts to ensure they align with your evolving needs and objectives.

As your 401(k) balance increases, exploring a customized investment strategy may offer more advantages than sticking with a one-size-fits-all, age-based allocation in target-date funds.

Consider having an advisor review your plan to reduce the risk of 401(k) match mistakes, ensure your beneficiaries are set up correctly, and keep up with IRS funding limits.

Invest Wisely:

Investing for retirement is crucial for women, aiming for long-term financial stability

The key? Don't let your investment strategy gather dust.

Your investment strategy should adapt over time to reflect changes in your financial goals and risk tolerance.

Educate yourself about different investment options and strategies to grow your retirement savings effectively.

Arm yourself with knowledge about various investment vehicles and strategies.

For example, goal-oriented investing in ETFs can be a powerful tool in your financial arsenal.

These instruments are not just part of your financial toolkit; they are key to building a diversified portfolio that can withstand market fluctuations while aligning with your specific objectives.

ETFs offer several advantages that can benefit women investors.

They are cost-effective, often featuring lower expense ratios compared to traditional mutual funds, helping you keep more of your returns.

They are also tax-efficient, as they typically have lower capital gains distributions, reducing your tax burden and allowing your investments to grow more efficiently over time.

Other benefits include:

Diverse Exposure: ETFs allow you to invest in a wide range of assets, from stocks to bonds to commodities, providing you with a well-rounded portfolio that can help mitigate risk and maximize returns.

Transparency: Holdings are typically disclosed daily, allowing investors to see exactly what assets the fund owns. This transparency can help investors make more informed decisions about their investments.

Flexibility: Traded on exchanges like stocks, ETFs allow investors to buy and sell them throughout the trading day at market prices. This provides flexibility in managing investments, unlike mutual funds, which are typically only traded at the end of the trading day.

Accessibility: ETFs are accessible to a wide range of investors, from individual investors to institutions. They can be bought and sold through brokerage accounts, making them easy to incorporate into a diversified investment portfolio.

By including ETFs in your investment strategy, you can take advantage of their cost-effectiveness, tax efficiency, and diverse exposure, providing you with a clearer understanding of their benefits and helping you build a more robust retirement portfolio.

For more insights on why women investors are successful, you can check out https://www.danerwealth.com/blog/why-you-should-invest-like-a-woman.

Plan for Longevity:

Consider potential longevity when preparing for retirement. On average, women live six years longer than men, with 85% of centenarians being women.

This increased longevity brings added healthcare costs, with over 70% of assisted living residents and more than half of nursing home residents being female.

Therefore, developing a comprehensive wealth plan is crucial for women to ensure a financially secure retirement, regardless of its duration.

Considering the longer life expectancy of women, strategically managing retirement account withdrawals becomes even more critical.

Careful planning of withdrawal timing and amounts ensures income needs are met throughout retirement while mitigating the risk of outliving savings.

This may include establishing a systematic withdrawal plan based on projected expenses and expected longevity, considering tax implications and investment performance, and adjusting withdrawal rates as needed based on changing circumstances.

In addition to managing withdrawals, diversifying income sources is essential for women to reduce dependence on any single source of income in retirement.

This can include a combination of Social Security benefits, pension income, annuity payments, investment dividends, rental income, and part-time work, among other sources.

By diversifying income streams, women can create a more stable and resilient financial foundation that is better able to withstand market fluctuations and unexpected expenses in retirement.

Start Planning Now

The key to catching up on lost time and setting the stage for a secure retirement is starting your planning now.

It's about taking a moment today to think deeply about your retirement needs, identifying potential obstacles that could derail your financial goals, and strategizing on how to overcome these hurdles.

The earlier you start this process, the better positioned you'll be to navigate the complexities of retirement planning.

Want to learn more? We’re always a phone call or email away! Phone: (770) 368-6033

Email: marc@danerwealth.com